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4 Sustainable Investing Myths Debunked

It’s no secret that the popularity of sustainable investing is on the rise, with a marked uptick in investments in green infrastructure, renewable energy, affordable housing and more. Despite this sector’s rise, skepticism and naysaying persist.

Let’s take a look at the most common gripes about SRI, and bust ’em:

Myth 1: Sustainable investing sacrifices returns.

Many critics claim sustainable investing limits the investing universe and potentially curbs returns. However, the data begs to differ. As Clean Technica reports, “A recent Morgan Stanley study of more than 10,000 mutual funds found that sustainable equity funds usually had equal or higher median returns and equal or lower volatility than traditional funds.”

Myth 2: Sustainable investing violates fiduciary duty.

Certain naysayers promote the idea that it violates the requirement to maximize investment returns above all else while keeping investors’ best interest at heart.

The reality? “Identifying material ESG factors is important to fulfilling ‘fiduciary duty.’ For example, robust corporate sustainability practices—including those that improve energy use or reduce waste—are material because they can lower the cost of capital for companies and improve operational performance.”

Myth 3: Sustainable investing is risky in uncertain markets.

Some skeptics point to the 2010-2011 collapse of the clean tech bubble as evidence that sustainable innovation is categorically risky. While there have been short-term hurdles in the clean tech space, the clean energy market as a whole has grown. “Wind and solar have grown annually by 23 percent and 50 percent, respectively, over the last decade.” Furthermore, policy and structural changes continue to support a trend toward renewable energies.

Myth 4: Sustainable investing is unfeasible.

Implementing SRI investments may seem convoluted, even when their importance is recognized. However, it’s by no means out of reach for the average investor with a bevy of consultants, managers and associations available to navigate the process. A good starting point is establishing a Board committee dedicated to education and strategic planning.

“The truth about sustainable investing is that it’s a step in the right direction for long-term profits—as well as for the planet and its people.”